Policies and Procedures
Policy 701 – Encumbrances
March 1, 1998
February 2, 2015
February 2, 2015
Director of Systems and Operations
To maintain accurate accounting for all budgets, the University utilizes encumbrances. Encumbrances are Commitment Control entries that record a commitment of funds by removing them from the budget balance available (BBA). All University online payment mechanisms (campus vouchers, independent contractors, purchase requisitions, purchase orders and travel authorizations) encumber funds.
Reason for Policy
Efficient and effective financial controls are an important tool for the University in safeguarding its resources. Proper control over receipts and disbursements is essential for any organization. Encumbrances provide an effective method of tracking commitments across a wide range of departmental end-users — an important control feature given that some procurements require a long lead time for the vendor to supply the merchandise or perform the service.
Manual payment mechanisms (petty cash reimbursements and wire transfer requests) are not encumbered. They are recorded as direct expenditures against the chartfield string.
Frequently Asked Questions
Q: Why doesn’t my purchase order show up as encumbered for the same amount as the requisition?
A: The requisition amount is generally an estimate of the cost for the merchandise. The purchase order will state the actual cost based on contract prices, discounts, etc.
|Encumbrance Control||Disbursement Services (Encumbrance/Liquidation Technical)||919-843-5047||919-962-2356|| disbursements
February 2, 2015: Updated references to campus vouchers and chartfield strings; removed Q&A and procedure.
May 20, 2010
July 27, 2007
October 14, 2003